{"id":1845,"date":"2007-10-24T17:03:35","date_gmt":"2007-10-24T21:03:35","guid":{"rendered":"http:\/\/www.mathewingram.com\/work\/2007\/10\/24\/facebook-why-microsofts-buy-makes-sense\/"},"modified":"2007-10-24T17:03:35","modified_gmt":"2007-10-24T21:03:35","slug":"facebook-why-microsofts-buy-makes-sense","status":"publish","type":"post","link":"https:\/\/mathewingram.com\/work\/2007\/10\/24\/facebook-why-microsofts-buy-makes-sense\/","title":{"rendered":"Facebook: Why Microsoft&#8217;s buy makes sense"},"content":{"rendered":"<p>Forget about the <a href=\"http:\/\/www.nytimes.com\/2007\/10\/25\/technology\/24cnd-facebook.html?ex=1350964800&amp;en=c27e6c86844c7723&amp;ei=5088&amp;partner=rssnyt&amp;emc=rss\">$15-billion valuation<\/a> for a moment &#8212; which I admit is difficult to do, since it amounts to about 100 times the company&#8217;s estimated annual revenue, a bubblicious multiple by almost any definition (Google is currently trading at about 14 times sales). Why wouldn&#8217;t Microsoft <a href=\"http:\/\/biz.yahoo.com\/prnews\/071024\/aqw247.html\">take a stake<\/a> in a fast-growing social network?<\/p>\n<ul>\n<li><strong>1<\/strong>. It gets to keep Google out, so that&#8217;s good.<\/li>\n<li><strong>2<\/strong>. It gets to serve ads to those millions of devoted users who check their Facebook every five minutes.<\/li>\n<li><strong>3<\/strong>. It has effectively bought a call option on the future of the company.<\/li>\n<\/ul>\n<p>It&#8217;s not like Microsoft has to come up with the $15-billion. All it has to do is structure a deal that is worth $250-million or so, complete with <a href=\"http:\/\/contracts.onecle.com\/ebay\/skype-earn-out-2005-09-11.shtml\">performance clauses<\/a> and so forth, and it gets a piece of something that could be worth substantially more at some point (nice to see that Jon Fine of BusinessWeek <a href=\"http:\/\/www.businessweek.com\/innovate\/FineOnMedia\/archives\/2007\/10\/the_piddling_15.html?campaign_id=rss_blog_fineonmedia\">agrees with me<\/a>). Not to hype the Google comparison, since they are completely different animals, but wouldn&#8217;t you have bought a small percentage of Google if you had had the chance, regardless of the implied valuation?<\/p>\n<p>Anyway, the bottom line is that it&#8217;s only a 1.6-per-cent stake. And it looks like <a href=\"http:\/\/www.mathewingram.com\/work\/2007\/10\/24\/facebook-is-this-face-worth-15-billion\/\">this face<\/a> really is worth $15-billion after all. So anyone want to take bets on how long it will be until Mark Zuckerberg decides to buy a jumbo-jet party plane just like the Google boys? I guess it&#8217;s a good thing Mark turned down Yahoo&#8217;s $1-billion takeover last year.<\/p>\n<p><b>Further reading:<\/b><\/p>\n<p>&#8212; Mike Arrington has been <a href=\"http:\/\/www.techcrunch.com\/2007\/10\/24\/liveblogging-the-facebook-press-conference\/#comment-1697199\">live-blogging<\/a> the conference call.<br \/>\n&#8212; Silicon Alley Insider did too, by way of writer <a href=\"http:\/\/www.alleyinsider.com\/2007\/10\/microsoft-facebook-call-live.html\">Peter Kafka<\/a>.<br \/>\n&#8212; <a href=\"http:\/\/watchmojo.com\/web\/blog\/?p=2204\">Some analysis<\/a> from Ashkan Karbasfrooshan at WatchMojo.<br \/>\n&#8212; John Paczkowski at All Things D leads with the Ballmer quote about Facebook being, well&#8230; <a href=\"http:\/\/digitaldaily.allthingsd.com\/20071024\/facebook-microsoft\/\">no big deal<\/a>.<br \/>\n&#8212; Rafat at PaidContent says there&#8217;s <a href=\"http:\/\/www.paidcontent.org\/entry\/419-breakinng-microsoft-beats-google-for-facebook-stake-250-million-for-min\/\">still room<\/a> for others to invest.<br \/>\n&#8212; Erick Schonfeld says Facebook took the path of <a href=\"http:\/\/www.techcrunch.com\/2007\/10\/24\/facebook-takes-the-microsoft-money-and-runs\/\">least resistance<\/a>.<br \/>\n&#8212; Rob Enderle <a href=\"http:\/\/www.nytimes.com\/2007\/10\/25\/technology\/24cnd-facebook.html?ex=1350964800&amp;en=c27e6c86844c7723&amp;ei=5088&amp;partner=rssnyt&amp;emc=rss\">tells the NYT<\/a> &#8220;this was almost personal.&#8221;<\/p>\n<div class=\"syndication-links\"><\/div>","protected":false},"excerpt":{"rendered":"<p>Forget about the $15-billion valuation for a moment &#8212; which I admit is difficult to do, since it amounts to about 100 times the company&#8217;s estimated annual revenue, a bubblicious multiple by almost any definition (Google is currently trading at about 14 times sales). Why wouldn&#8217;t Microsoft take a stake in a fast-growing social network? &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/mathewingram.com\/work\/2007\/10\/24\/facebook-why-microsofts-buy-makes-sense\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Facebook: Why Microsoft&#8217;s buy makes sense&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_crsspst_to_mathewingramblogwordpresscom":false,"mf2_syndication":[],"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-1845","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/mathewingram.com\/work\/wp-json\/wp\/v2\/posts\/1845","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mathewingram.com\/work\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mathewingram.com\/work\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mathewingram.com\/work\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mathewingram.com\/work\/wp-json\/wp\/v2\/comments?post=1845"}],"version-history":[{"count":0,"href":"https:\/\/mathewingram.com\/work\/wp-json\/wp\/v2\/posts\/1845\/revisions"}],"wp:attachment":[{"href":"https:\/\/mathewingram.com\/work\/wp-json\/wp\/v2\/media?parent=1845"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mathewingram.com\/work\/wp-json\/wp\/v2\/categories?post=1845"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mathewingram.com\/work\/wp-json\/wp\/v2\/tags?post=1845"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}